Month: May 2007

Wachovia Corporation (WB) will acquire the A.G. Edwards Inc. (AGE) brokerage in a deal set for execution later this year. The merger will create the nation’s second largest brokerage after Merrill Lynch (MER). The overall cash and stock value of the deal is estimated at $6.8 billion.

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In the first episode of HBO’s ‘The Sopranos,’ Tony Soprano presents himself to his therapist as a waste management consultant. Immediately, his psychiatrist reveals her understanding this is synonymous for Tony’s real, and substantially seamier, occupation.

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In article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT) with an eye for a bullish strategy for CME. We continued the CME bull put credit spreads saga and for the month of May, the strategy returned a very nice +12.4% return. This strategy has returned over 52% in only six months. The bidding war between CME and ICE for CBOT continues as outlined in the article, “Two Exchanges May Enter Bidding War to Acquire the Chicago Board of Trade”. CME recently upped its bid for CBOT, but its bid is still not higher than ICE’s bid. Even if the CME/CBOT merger does not come to fruition, CME is looking bullish and using PowerOptions powerful stock options tools to search for potential candidates returned the following bull-put credit spreads stock options position:

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Cell phone companies have been in the news quite a bit lately. The industry is bustling with technology and innovation. This can be confusing to investors as evidenced by the sometime frantic and schizophrenic market.

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Jim Cramer’s acronym for the hot places to invest is BRIC ME. This stands for Brazil, Russia, India, China and the Middle East. But, in his usual hyper kinetic reasoning, he often clarifies this by saying the Rest of the World really includes nearly every country but Japan and the United States.

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The PowerOptions WeBlog accurately predicted the following trades in the articles “Entrepreneur Magazine Announces Top Franchises for 2007” and “Berkshire Hathaway Buys up Rail Stocks – A look at Covered Calls in the Railroad Sector”: Audio Podcast: An audio podcast of this article is available at: poweropt.com/podcasts/2007_05_22_May_Results.mp3

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Alltel Corporation (AT), the nation’s fifth-largest cell-phone provider (largest in terms of geographic area) announced Sunday night it has agreed to a deal to be acquired by the private investment firms TPG Capital (formerly Texas Pacific Group) and Goldman Sachs Capital as part of a $27.5 billion deal.

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Shipping stocks have almost universally gained over the past two years. Many of the sectors stocks, Alexander and Baldwin (ALEX), Knightsbridge Tanker (VLCCF) and TBS International (TBSI) to name three, are up over 30% since the beginning of the year.

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Another industry we’ll consider which has a tendency to hold up well during an economic malady is the banking industry. The idea of banks performing well during tough economic times seems counterintuitive, but the reason banks are non-cyclical is due to lower interest rates. Generally, the Federal Reserve lowers interest rates during periods of economic slowness in order to stimulate activity and help prop up the economy. And banks generally do very well in an environment of low interest rates, as their costs for borrowing money are significantly less.

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Continuing to evaluate industries with a tendency to hold up well during tough economic times, today we will consider the players in the tobacco industry. Even when the economy isn’t doing so hot, the tobacco industry generally continues to perform well, as tobacco smokers tend to continue to indulge in the product.